US health plan is trapped by free market ideology

by Ken Olende

Published Tue 15 Sep 2009

Issue No. 2169

US president Barack Obama addressed a joint meeting of Congress last week about the need to reform the US health system, which was one of his central electoral promises. This followed months of sniping from the right.

Whatever his opponents say, most Americans are aware that the health situation is bad and getting worse. The remarkable thing is how timid his proposals are.

Obama knows the gravity of the problem. In his weekly address to the nation last Saturday he said, “Over the last 12 months, nearly six million more Americans lost their health coverage – that’s 17,000 men and women every single day.

“We’re not just talking about Americans in poverty either – we’re talking about middle class Americans.”

He explained that about half of all Americans under 65 will lose their health coverage at some point over the next ten years. This is because so many have insurance tied to their jobs.

His solution is to “make it illegal for insurance companies to deny you coverage because of a pre-existing condition, drop your coverage when you get sick, or water it down when you need it most”.

These measures are welcome and his plans attack the terrible complacency of the US establishment, but none of the schemes under consideration address the central problem of the US health system – its domination by private insurance companies.

A central plank of all the plans is to make it compulsory for all US residents to take out private health insurance.

The government would pay the fees of those who could not afford it. So Obama is guaranteeing the profits of health insurance companies, not undermining them.

The Financial Times newspaper commented, “Obama promises no increase in public borrowing and no hike in middle class taxes. The bills promise to raise most of what is needed by reducing waste, inefficiency and fraud in Medicare, the government programme for the elderly.”

Obama’s preferred version includes the introduction of a “public option” – a publicly-owned company that would compete with the private companies in an attempt to undermine the price fixing that blights the system.

Competing

Under the existing system people have to take out health insurance with one of a range of competing companies. Those who can afford it enjoy the best healthcare in the world, but 46 million people cannot afford health insurance.

Most working class Americans are terrified of serious accidents or long-term illnesses – knowing that their insurance company will try and wriggle out of expensive commitments.

The US is the only major economy to have such a healthcare system. It was 37th in a ranking of health systems produced by the World Health Organisation in 2000, despite spending twice as much per head on healthcare as comparable countries.

The private system is supplemented by two government initiatives, Medicare and Medicaid.

Medicare is a universal system for elderly people and those with disabilities.

However, it does not provide equal provision. Its services are enormously overstretched and what any patient receives is based on the level of payments they can afford to put in.

In a recent survey 72 percent of Americans said they were worried about inadequate healthcare when they retired.

Medicaid is a means-tested system offering basic healthcare to people who can’t afford insurance.

Obama has no clear plan to resolve this mess, and is already retreating under pressure from the right.

Opponents

The Financial Times pointed out, “In his speech Obama affirmed his support for the public option, but signalled flexibility. He was open to other ways of widening choice.”

There, as in Britain, “choice” is likely to mean real choice for those who can afford it and reduced access for those who can’t. The president has even said he will seek “common ground” with Republican opponents.

His plans do not match the health systems in all other developed countries. These all use a “single-payer health insurance” scheme, where a central body collects all medical fees and then pays for all services through a single, usually governmental, source.

The acceptance of the belief that the market makes things more efficient is hamstringing Obama’s attempts to reform the US system.

Obama has said, “Right now the healthcare system is perverse. It does not incentivise those things that actually make people better or keeps them out of hospitals in the first place, and that’s what we have to change.”

But none of the new systems on offer would alter how investment is organised.

Those in support of change can point to the state of Massachusetts, which enacted a version of Obama’s plan in 2006. While that means it now has the highest insurance coverage of any US state there are enormous problems with health provision.

The poor may be covered, but there has been no improvement in the level of treatment in hospitals, and costs are spiralling as more people compete to gain access.

The coalition that backed Obama’s campaign for president is noticeable by its absence from the streets. It is hard to motivate people if generalising conditions in Massachusetts is the best on offer.

Obama has proved that the will to reform exists, but is following his political training by trying to make deals in Congress rather than mobilise forces that could challenge the vested interests that want to block change.

On the other hand, his opponents are divided over health reform. The current system is unworkable, but to make it efficient requires major changes that undermine the free market values of the US’s elite.

The media is filled with their bizarre fantasies about totalitarianism and “death panels” because it is hard for them to say the real reason for their fear – dented profits.

Unfortunately, even if Obama wins US workers will still have worse healthcare than any comparable group.